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Central Asia To Green Its Economies

Soviet dominance left Central Asia’s environment in shambles. From hundreds of nuclear blasts in the testing grounds of Semey (Semipalatinsk) in Kazakhstan to barbaric destruction of water management in the drying-up Aral Sea, these environmental disasters left the land-locked five countries to deal with destroyed human lives, ruined ecosystems, and pollution.

As Kazakhstan shut down Semey before announcing its independence in 1991, hope appears that at least some of the past destruction may be restored. Together, with the neighboring Uzbekistan, the nation is working on restoring the Aral Sea. Then-president of Kazakhstan Nursultan Nazarbayev initiated these environmental policies, which began ameliorating the Soviet-era abuses, and are further developing today towards a more environmentally friendly region.

Energy plays a key role in all this. Amidst the global transition to renewables, the nations of Central Asia are striving to shake their Soviet-era over-reliance on extractive industries and hydrocarbon-dependent growth. The region possesses an estimated 5% of the world’s natural capacity for wind and solar energy capture, yet much of this potential has yet to be unlocked. That’s in the process of changing, however, with Kazakhstan leading the charge.

July 1 marks the official rollout of Kazakhstan’s new environmental legislation – initially signed into law by President Kassym-Jomart Tokayev in January of this year. In a tweet, Minister of Ecology, Geology, and Natural resources Magzum Mirzagaliyev had this to say about the new code:

The experts in the Ministry of Ecology, Geology, and Natural Resources, the public and deputies worked on this strategic document. The code meets all modern challenges and provides norms designed to improve the ecology of our country due to the well-coordinated work of all participants. Kazakhstan will have a stable and effective system of norms with the adoption of the new environmental code…the provisions of which are in line with OECD standards.

The code will promote biodiversity, establish tariffs to encourage renewable energy source (RES) development, and implement emissions caps for Kazakhstan’s top 50 carbon emitters. For Central Asia’s largest economy, adoption of this legislation is a big step towards meeting climate obligations ratified by then President Nazarbayev in 2016 per the Paris Climate Agreement.

In the neighboring Uzbekistan, the region’s most populous country, the government just announced its intent to abandon the pursuit of long-term fossil fuel independence. According to Deputy Energy Minister Bekhzot Narmatov, the move is a response to strong investor interest in solar and wind relative to traditional fossil fuel projects. Tashkent says it will have access to about 3 gigawatts of power from wind generation in two to three years’ time.

These moves build off climate reform policies put in place years ago. One of president Shavkat Mirziyoyev’s first actions since coming to power in 2016 was the rollout of a sweeping reform agenda that included, among other things, earmarks for attracting renewable energy investment.

The neighboring Kazakhstan started similar reforms even earlier.

In 2013, President Nazarbayev launched his ambitious ‘Green Economy’ agenda under the 2050 national strategy, which set renewable capacity targets for 2020, 2030, and 2050. A goal of carbon neutrality by 2060 was later established. Since then, Kazakhstan has increased its 2030 renewable target from 10% to a more ambitious 15%. Kazakh legislators have also pushed for an increase in the efficiency of existing energy technologies – especially coal – as one of several immediate changes to be made to energy infrastructure.

Despite giving up the Soviet nuclear arsenal in the 1990s, Kazakhstan is also the largest uranium producer in the world. Ultimately, Kazakhstan’s commitment to carbon neutrality by 2060 will force it to cease heavy reliance on heavily polluting coal. It is no wonder that Nazarbayev also initiated the 2017 World EXPO, dedicated to Future Energy, conducted in Kazakhstan.

It is a delicate tightrope for President Tokayev to walk, understanding his country’s reliance on fossil fuels while simultaneously recognizing that the future of the Kazakh economy — and the world’s — depends on renewable energy sources. Kazakhstan routinely ranks among the most energy-intensive economies in the world and leads the region in production capacity. From 1992 to 2007, Kazakh exports grew 275%, making it the success story in the post-Soviet economic competition.

The regional economic boom of the late 1990s saw Uzbekistan triple its energy production and Turkmenistan double its energy exports, yet they lag behind Kazakhstan in productivity. And while Uzbekistan is pushing hard for reforms, Turkmenistan and Tajikistan remain moribund, while Kyrgyzstan is experiencing chronic political upheavals.

While achieving carbon neutrality in an oil-rich region will be daunting, a majority of large-scale energy projects in the nation involve retrofitting aging coal-fired powerplants. For transnational projects to exploit Central Asia’s 1.3 trillion kWh of potential renewable energy capacity, innovators need to overcome fossil energy industry roadblocks.

The region’s two mountainous countries – Kyrgyzstan and Tajikistan – also possess large hydropower resources, though only recently did Uzbekistan drop its opposition to hydroelectric projects in Tajikistan, with the two countries announcing two hydroelectric facilities valued at over $500 million. A possibility of exporting electricity to Pakistan via the war-ridden Afghanistan is on the agenda.

As the region’s renewable capacity increases, it is vital to collaborate on regional cooperation, something President Nazarbayev preached for decades. This includes grid compatibility. The legacy Central Asian power grid remains in use today, but needs costly modernization to integrate the renewables. Orsted, a major private investor in renewable projects, reports that many Central Asian countries lack adequate financial incentives for large-scale projects, and that the current grid structure lacks the capacity to support large-scale renewable power.

Efforts to resolve this and attract further capital have borne fruit. Central Asian countries have utilized a nationalized grid authority, controlling distribution and generation to create programs using international investment. Kazakhstan’s market-based energy auctions have allowed for competitive pricing, greater access to renewable energy, and greater industry-wide transparency. Similar efforts across the region have succeeded in drawing further investment. The Dubai-based Phanes Group announced the first privately funded solar facility this year in Uzbekistan. Uzbekistan has also partnered with the Asian Development Bank, seeking to add another 100 MW to its solar capacity.

As the world grapples with climate change and its potentially irreversible consequences, Central Asia’s economic leader Kazakhstan and the most populous country Uzbekistan have demonstrated their commitment to embracing alternative energy sources. To achieve further progress, Central Asia as a whole must create a compatible legislative infrastructure, enabling regulation and interstate technical standards. National governments should support private investors in order to develop a regional carbon-neutral economy.

As investments in the renewable energy sector rise, green policies and market forces will boost growth, innovation, and employment across wind, solar, and hydro sectors. As Central Asia continues to develop better relations with international financial institutions, the alternative energy market will capitalize on the region’s massive potential.
Source: Forbes

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